Using digital customer service to boost revenue through customer retention

It is a truism that it costs businesses far more to acquire new customers than to retain existing customers. And yet, according to a report published in Harvard Business Review, most companies still use the customer acquisition rate as a primary metric of marketing performance. As the report points out, “focusing on raising rates ever higher encourages marketers to overlook the law of diminishing returns”. Instead, businesses need to be focusing on customer retention.

Rather than over-investing in the acquisition of new customers who may or may not repay the cost of attracting their business, businesses need to focus on retaining the customers they already have by meeting their needs and improving customer experience. Unsurprisingly, a study conducted by Bain & Company (the inventor of the NPS) demonstrated that something as small as a 5% increase in customer retention can increase profits by more than 25%! And in a marketplace that is growing more digital, the best way to improve customer retention and loyalty is through providing digital customer service.

Additionally, in examining the issue of declining customer loyalty, Accenture has found that poor first-contact resolution has consistently remained the top frustration for the past five years of their annual survey of banking consumer experience.